Compliance

When Arthur Levitt announced that he was stepping down as chairman of the Securities and Exchange Commission last month, Washington lawyers predictably began speculating on his replacement almost immediately. It might be some time, however, before President-elect George Bush makes the appointment.

The Securities and Exchange Commission is implementing minor changes to the new Form ADV rules it adopted in September, which require investment advisers to file the form electronically, the SEC has announced.

An administrative law judge has revoked the registration to operate as an investment adviser of Piper Capital Management of Minneapolis, a unit of U.S. Bancorp Piper Jaffray, and fined the firm $2.005 million. The actions, by Judge H. Peter Young, came in an initial decision with regard to allegations brought by the Securities and Exchange Commission. The SEC's division of enforcement, in the decision, characterized the proceeding as "one of the largest and most complex it has ever conducted."

The U.S. District Court of the Eastern District of New York has granted a motion to dismiss a lawsuit charging Prudential Life Insurance Company of America of Newark, N.J. with attaching excessive fees to its variable annuities.

The National Association of Securities Dealers Regulation last week issued a complaint against Dean Witter Reynolds of New York alleging the company used deceptive practices in the marketing of its proprietary bond funds known as Term Trusts.

Earlier this month, NASD Regulation proposed a rule change which would give mutual fund companies more flexibility with regard to related performance' information in fund advertisements, according to Cindy Fornelli, senior advisor to the director of the division of investment management of the Securities and Exchange Commission. While the SEC supports the proposed changes, it would still like to see changes in the rules regarding manager performance, Fornelli said. NASD Regulation is a subsidiary of the National Association of Securities Dealers of Washington, D.C.

The Business Checking Modernization Act, a bill in Congress that would repeal a law prohibiting banks from paying interest on business checking accounts, could create a new major competitor for money market funds.

The SEC has adopted new auditor independence rules with several notable changes from the original rule proposal.

A request by the McGraw-Hill Companies of New York for a public hearing on the Vanguard Group's efforts to add an exchange-traded share class will most likely be denied, allowing Vanguard to launch the new shares, according to industry analysts.

BOSTON -The Securities and Exchange Commission is most likely to investigate fund companies about their allocation of 'hot IPOs' when a firm fails to provide adequate information about their allocations, according to Victoria Hulick, director of

John Clifton Bogle is not only the founder of Vanguard but also the pioneer of the first no-load and the first index mutual fund. After stepping down as senior chairman of The Vanguard Group of Malvern, Pa. last December, Bogle became president of the Bogle Financial Markets Research Center, a think-tank at Vanguard headquarters.

WASHINGTON - The SEC will adopt a rule by year-end requiring a fund's name reflect at least 80 percent of its holdings, Paul Roye, director of the SEC's division of investment management, told a symposium here Oct. 12.

In spite of requests to delay the implementation of Regulation Fair Disclosure, the Securities and Exchange Commission confirmed at press time that it would take effect on Oct. 23.

WASHINGTON D.C. - The prevailing industry stance that more frequent disclosure of fund holdings would only confuse investors is hurting the industry's reputation, according to several analysts and industry executives who spoke at a conference here last week on fund disclosure.

TORONTO - Currently, there is no standardized fund regulation in Canada and many fund complexes are structured as trusts, overseen by trustees, who use an advisory regulatory model. The advisory board offers guidance but has no decision-making authority over the fund complex. Altamira and Royal Mutual Funds currently use this model.

Mutual fund companies and other investment firms are not prepared for the SEC's forthcoming "T+1" requirement that they clear and settle trades within one day of the initial trade, fund industry executives said.

washington, d.c. - Although it is a vital part of the Investment Company Act of 1940, section 17, which prohibits transactions between affiliates, should be revised in order to allow greater efficiencies in the operations of mutual funds, according to fund executives.

The Money Management Institute of Washington D.C. has taken exception to the Investment Company Institute's request that the SEC re-examine a rule that grants managed accounts an exemption to the Investment Company Act of 1940, according to a memorandum the Institute sent to its membership Aug. 29.

Two of the U.S.-domiciled funds of Julius Baer Group of Zurich will be among the first bank-sponsored mutual funds to register as investment advisers with the SEC as a result of new requirements in the Financial Modernization Act, according to SEC filings.

WASHINGTON, D.C. -SEC Chairman Arthur Levitt last month said the SEC would produce the "hard" evidence of auditing problems that Phil Gramm (R-Tex.), chairman of the Senate Banking Committee, called for to justify the commission's proposed independent auditor rules.